Atuk and Atuk and Anor
[2016] FamCA 179
•24 March 2016
FAMILY COURT OF AUSTRALIA
| ATUK & ATUK & ANOR | [2016] FamCA 179 |
| FAMILY LAW – PROPERTY – adjustment of property interest – where appropriate to make adjustive orders as to property - where consideration as to whether husband’s mother has equitable interest in the matrimonial home by way of express trust, resulting truest or constructive trust – discussion of applicable principles – where resumption of advancement in favour of the husband - where husband’s mother has no equitable interest – where exclusion from consideration various debts of the husband – where consideration of the parties contributions – where consideration of relevant s75(2) factors. |
| Conveyancing Act 1919 (NSW) s 23C Family Law Act 1975 (Cth) ss 75(2), 79 |
| Baumgartner v Baumgartner (1987) 164 CLR 137 |
| APPLICANT: | Ms Atuk |
| 1st RESPONDENT: | Mr Atuk |
| 2nd RESPONDENT: | Ms B Atuk |
| FILE NUMBER: | PAC | 4209 | of | 2014 |
| DATE DELIVERED: | 24 March 2016 |
| PLACE DELIVERED: | Parramatta |
| PLACE HEARD: | Parramatta |
| JUDGMENT OF: | Foster J |
| HEARING DATE: | 23, 24 and 25 February 2016 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Dura |
| SOLICITOR FOR THE APPLICANT: | McAuley Hawach Lawyers |
| COUNSEL FOR THE 1ST RESPONDENT: | Ms Friedlander |
| SOLICITOR FOR THE 1ST RESPONDENT: | Atila Lawyers |
| COUNSEL FOR THE 2ND RESPONDENT: | Ms Snelling |
| SOLICITOR FOR THE 2ND RESPONDENT: | Edrem Hussein Solicitor |
Orders
That the husband and wife do all things necessary to authorise and direct that controlled monies presently held on trust for them be paid as follows:
(a) As to $254,194 together with pro rata interest accrued on that sum to the wife; and
(b) As to balance then remaining to the husband.
That any application for costs be by way of application in a case supported by affidavit filed within one month from this date.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Atuk & Atuk and Anor has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| FAMILY COURT OF AUSTRALIA AT PARRAMATTA |
FILE NUMBER: PAC 4209 of 2014
| Ms Atuk |
Applicant
And
| Mr Atuk and Ms B Atuk |
Respondents
REASONS FOR JUDGMENT
A contribution to the cost of the purchase of what was to become the matrimonial home by the husband’s parents has complicated the question of property adjustment as between the applicant wife and the respondent husband.
Proceedings were commenced by the wife by application filed in September 2014. The husband filed a response to that application in October 2014 seeking orders as to property adjustment in that in summary the proceeds of sale of the former matrimonial home at Suburb C be firstly applied in repayment of loans advanced by the husband’s parents and thereafter equally between the husband and wife.
On 7 January 2015 the husband’s mother, Ms B Atuk, who had intervened in the proceedings and was joined as second respondent filed a response seeking orders in summary that provided for the net proceeds of sale of the former matrimonial home to be firstly applied in repayment of debt allegedly owing to her and thereafter as otherwise ordered by the Court or agreed by the husband and wife.
The wife filed an amended application on 26 March 2015 seeking final parenting orders and orders as to property adjustment that sought that the net proceeds of sale of the home be paid entirely to her.
Context
The husband and wife married in Country D in 1998. Following the marriage the wife moved to Australia from Country D in 1999 to live with the husband.
At the commencement of cohabitation the wife had no assets of any significance. The husband had the property at Suburb C and a car.
There are three children of the marriage. The eldest is presently 16 years of age and resides with the husband and spends no time with the wife. He has left school and is apprenticed. The younger two children aged nearly 13 and nearly five reside primarily with the wife and spend defined time with the father with that time comprising alternate weekends during school term from after school Friday to before school Monday, and overnight in the other week from Thursday after school to before school Friday and one half of school holiday periods.
Interim parenting orders were made on 2 February 2016 in relation to the two younger children with the husband and wife to have equal shared parental responsibility, the children to live with the mother and the children to spend time with the father as agreed or in default as per the arrangements referred to above.
It was agreed by the parties that for the purposes of determination of property issues between them, the Court would have regard to the existing arrangements for the children notwithstanding that parenting proceedings have not as yet been completed.
The husband and wife separated in late April 2014.
The wife is presently in employment and receiving government parenting benefits. She earns about $1200 per week as a contractor and pays about $250 per week in tax. During cohabitation she worked various jobs part time as well as being the primary carer for the children. She did not work in the 2011 and 2012 financial years.
Until 2004, when he obtained full time employment with Company G, the husband worked various jobs earning only modest income. The husband commenced extended leave with Company G in September 2014. Thereafter he assumed the role of carer for his elderly mother. At the time of trial he had been operating a business called “E Pty Ltd” through F Pty Ltd, commencing in the 2013 financial year, and was able to undertake casual work for Company G. His average taxable income from fulltime work at Company G in the 2012, 2013 and 2014 financial years was $67,345.
In April 2008 the husband paid from joint funds $8,452 to be released from 18 months military national service in Country D.
In his oral evidence the husband conceded that during cohabitation the wife was a carer for his elderly mother such that following separation he was required to assume that role and take leave from full time employment from October 2014. He now receives a government carers benefit in relation to his care of his mother yet does not live with her and has not done so since shortly after sale of the home.
During cohabitation the husband and wife had a joint account into which their income and rents from the second respondent were paid. The wife was aware of the rent payments being received. The husband for the most part operated the joint account and managed the finances of himself and his wife.
During cohabitation the husband and or wife and the children travelled about every three years to Country D to stay with and visit extended family. The primary cost was about $5,000 plus airfares for each trip. The husband asserts that the travel put a strain on family finances. The trips were:
a)2001: both for about three months with the eldest child;
b)2004: wife and the two eldest children for about 3 months;
c)2007: both and the two eldest children for about 2-3 months;
d)2010: wife and the two eldest children for about 2 months;
e)2013: both with all children for about 1-2 months.
At trial it was common ground that the contributions during cohabitation by the husband and wife, leaving aside initial contributions and the additional income from the second respondent’s rental income stream, were all but equal.
Following separation there were various arrangements in relation to the care of children. All three children resided primarily with the wife until October 2015 when the eldest child moved to reside with the husband. During the 2015/2016 school holidays the two younger children spent a week about with each parent.
The wife has received little child support from the husband for the children post separation and she has been the primary support for all the children until the eldest moved to reside with the husband. The husband after separation cancelled the car insurance on the wife’s car, her health cover and her telephone account. The wife did have access to children’s bank accounts to help meet their expenses. Should the husband not resume gainful employment the wife has little prospect of reasonable financial support for the two youngest children into the future.
The Suburb C property
In June 1998 the husband purchased in his own name the property at H Street, Suburb C for $245,000. The purchase price comprised a mortgage advance from the Westpac Banking Corporation of $190,000.
The mortgage was in the name of the husband alone. However the application for finance to the mortgagee bank was made by the husband, his mother and the husband’s late father jointly. It appears that as a consequence mortgage statements were thereafter issued in the joint names of all three, notwithstanding that the husband was the sole mortgagor.
At the time of purchase it was asserted to the mortgagee bank by the husband that the property was being purchased by the husband for him and his parents to live in. There was no suggestion the husband’s parents had an interest in the property. Indeed the second respondent asserted through her solicitors by letter dated 27 March 2015 that funds provided by her were a debt owing to her by the husband, although this contention was later not pursued and withdrawn at trial. The husband nevertheless asserted in his oral evidence that the funds were a loan.
The balance of the purchase price of the home including stamp duty and associated costs of about $65,000 was provided by the husband’s parents. At the time of purchase the husband represented to the mortgagee that he was earning about $520 per week gross.
Subsequent to purchase the property was tenanted for a short period and the husband and wife commenced to occupy the property in February 1999 at which time the husband’s parents also moved to the property. The husband’s parents were the joint owners of a home unit property at I Street, Suburb C and this property was tenanted by them after they commenced to occupy the home.
Various funds were expended on the property after purchase before the wife commenced to reside there. A balcony was a constructed and aluminium windows installed. By reason of the mixing of funds of the husband and wife and the second respondent it cannot be determined on the evidence as to who paid what, the husband representing to the wife that he had paid for various expenditure.
The husband’s father passed away in July 1999 and his mother continued to live in the home for another 15 years until its sale in early October 2014 at which time she returned to reside in her home unit property.
In June 2014 prior to the sale of the home the husband’s mother caused a caveat to be registered over the title to the property, that caveat asserting
equitable interest arising as a result of the caveat for paying the deposit to the purchase of and the loan repayments for the loan repayments for the mortgage over the above-mentioned land.
The nature of the interest of the second respondent in the property, if any, is a matter for determination.
Without the knowledge of the wife the husband furtively sold the home at auction in August 2014 for $850,000. Funds remain in a controlled monies account.
Second respondent rental payments
Subsequent to the husband’s parents moving to reside in the home their home unit was rented and rental payments less agent’s commission were deposited to the husband and wife’s joint account. Expenses in relation to the rented property were met variously from the joint account or by the second respondent from her pension.
The second respondent’s income varied depending on rental income received and the consequent adjustments to her aged pension. Her income tax documents are not available for many of the years of mutual cohabitation.
Those documents that are available reveal:
a)In the 2006 financial year her pension was only $1,279 ($25.50 per week) with net rent received of $4,738 ($91 per week);
b)In the 2007 financial year her pension was $11,463 ($220 per week) with net rent of $7,999 ($154 per week);
c)In the 2008 financial year her pension was $12,138 (233 per week) and her net rent $8,935 ($171 per week); and
d)That thereafter the second respondent was not required to lodge tax returns for the financial years 2009 and thereafter (Exh J) presumably as her income did not exceed the tax free threshold.
From her income the second respondent asserted that she provided for her own needs, although it is to be expected that they were modest by reason of her level of income. The inference is that some of her needs were met from the parties’ joint account.
The second respondent’s gross rent after commission in the financial years 2009 to 2014 was as follows (Exh M and her affidavit):
a)1999 $ 2,560 ($160 per week 16 weeks)
b)2000 $ 8,320 ($160 per week)
c)2001 $ 9,360 ($180 per week)
d)2002 $ 9,880 ($190 per week)
e)2003 $10,400 ($200 per week)
f)2004 $10,400 ($200 per week)
g)2005 $11,440 ($220 per week)
h)2006 $11,440 ($220 per week)
i)2007 $11,440 ($220 per week)
j)2008 $12,000 ($230 per week)
k)2009 $11,750 ($225 per week)
l)2010 $12,761 ($245 per week)
m)2011 $14,745 ($283 per week)
n)2012 $15,001 ($288 per week)
o)2013 $16,163 ($310 per week)
p)2014 $13,673 ($297 per week over 46 weeks)
From these rental payments and her consequent part-pension, if any, the second respondent was obliged to pay rates and strata levies on her home unit and provide for her own necessities. The second respondent did not adduce any evidence of her own bank accounts that would have assisted in assessing the level of her contributions as asserted by her and the husband.
These rentals were paid into the husband and wife’s joint account from which mortgage payments were made. The sums appear significant in gross terms but in the absence of evidence from the second respondent as to her financial circumstances other than rent, that is, the rate of her pension from time to time or other available capital funds, the funds in reality available to the husband are uncertain. The extent of any contribution by the second respondent to “the mortgage payments” is thus unclear. What did transpire was a contribution by her to the funds of the husband and wife from which household and other expenses were paid and mortgage payments made.
It was conceded by the second respondent that the husband in effect managed the property, dealt with the real estate agent and that he could draw on her personal account as required. That personal account was not in evidence.
It was conceded that these contributions by the second respondent should in any event be regarded as being made on behalf of the husband.
The first refinance
In September 2004 the husband refinanced his mortgage over the property. The refinance procured the discharge of the original mortgage debt and the borrowing of further funds by the husband.
At the time of refinance the mortgage debt had been reduced by about $25,000 over the six year period. The mortgage debt was $164,614. The husband borrowed a further $70,000 by way of a supplementary loan, taking total debt secured by mortgage to about $234,000.
The husband asserts that the extra borrowing was used to pay off credit card debt and create a redraw facility.
The husband arranged the refinance and represented to the bank that he was the sole owner of the Suburb C property.
The second refinance
In late 2008 the husband again refinanced the home.
The primary mortgage debt was about $164,000. The husband refinanced the supplementary loan by borrowing $200,000 that paid out the then remaining supplementary loan balance of $67,673 and created an available drawing of the balance after fees of about $133,000.
The husband it appears then redrew and paid the funds as follows:
15.09.2008Primary mortgage account $10,000
30.12.2008Primary mortgage account $22,000
30.12.2008Westpac MasterCard $56,213 (Exh W)
30.12.2008Citibank Credit Card $10,000
30.12.2008ANZ Credit Card $17,500
$115,713
The purpose for the accumulation of these debts prior to the refinance is a matter of conjecture but it is not contended by the wife that the husband should be responsible for the additional mortgage borrowing.
The wife asserts that the husband when spoken to by her as to the disposition of the refinanced funds said “I gambled it”. He asserts he said “Do you think I gambled it?”
The husband in his oral evidence was taken to these transactions.
The Westpac Credit Card: Commenced at the time of purchase of the home. The payment in December 2008 discharged the debt, in effect transferring it to the lower interest mortgage debt. The card had a limit of $55,500. He was the sole user of the card.
Thereafter the husband by November 2009 had drawn the card down to nearly $52,000. A most significant portion of the funds expended were cash advances with some expenditure relating to matrimonial expenses (Exh W). Subsequent to late 2009 the card has mostly been at or over its limit, with payments to the card keeping the account mostly within limit. This Westpac account is now in default with a balance owing of $64,500. No analysis of the card transactions was provided to justify the wife bearing some responsibility for same and it should be excluded from the “pool” for adjustment purposes.
The CBA Personal Loan: This was taken out by the husband in 2009/2010 for he says $16,000. The balance now is over $26,000. He asserts funds were paid to credit card debt, holiday expenses and “maybe some renovations. No documents were provided to assist these assertions notwithstanding his evidence that his solicitor was in possession of the CBA statements. This debt was incurred when the husband was in full time employment and the household receiving some contribution from his mother. The husband asserts that he paid the loan funds into his own CBA savings account not the joint account of the parties. The application of those funds from his CBA account is not in evidence. He conceded that there were cash withdrawals at Star City Casino and various hotels where gambling took place and that he gambled “some of” the loan funds. He asserted that the loan was in default but that he was not aware of any recovery proceedings.
It is his contention that this debt should be included in the asset pool to the effect that the wife will bear some responsibility for same. He has adduced no evidence such as would support such contention.
The Citibank Credit Card: This was in the husband’s name, he says from some date before 2011. He conceded he withdrew cash from the account. The card statements are Exh R. The card has a credit limit of $20,000. Exh R commences in October/November 2011 with the card already back to close to its limit at $19,823. Subsequent statements reveal almost exclusively minimum payment, late fees and interest keeping the card at or close to its limit at the time of separation. The husband provides no evidence as to his use of the card in the period from late 2008 until late 2011. His trial affidavit makes no reference to the circumstances as to the initial accrual of this debt. It is his contention that this debt should be included in the asset pool to the effect that the wife will bear some responsibility for same. He has adduced no evidence such as would support such contention.
ANZ Credit Card: The husband held various credit cards with the ANZ transferring the balance to each consecutive card over time. They were operated solely by him. As at January 2007 his debit balance was $10,396 as against a credit limit of $12,000. In February 2008 the credit limit was increased to $16,000 and the husband promptly withdrew $6,000 in cash over the next few months. As at August 2008 the debt was $15,842. He continued to use the card substantially for cash advances until December 2008 at which time the card debt was $18,213.
The mortgage refinance in late 2008 provided $10,000 which he deposited to the card on 30 December 2008 and then $7,500 he deposited in early January 2009. Thereafter he withdrew various cash amounts totalling $22,000 over the next few months. By April 2009 the card was at its limit. Thereafter he has facilitated minimum payments with the card being debited interest and late payment and over limit fees.
During these periods he was in full time employment.
It was put to the husband that he gambled the funds withdrawn. His response was “I don’t agree that all of it was gambled, you have to look at the transactions”. An examination historically of the statements reveals significant cash withdrawals and as conceded by the husband, some at the Star City Casino.
Once again it is his contention that this debt should be included in the asset pool to the effect that the wife will bear some responsibility for same. He has adduced no evidence such as would support such contention.
Other financial assistance
In 2004 the husband’s mother gifted to the husband and wife $7500 that was applied by them to the purchase of a 4WD motor vehicle.
Subsequently in December 2013 the husband’s mother provided to the husband and wife $10,000 towards the purchase of a motor vehicle. She asserts that portion of these monies has been repaid and that she is still owed $6000, whilst the wife asserts that the loan has been repaid in full.
Certain repair and renovation work was undertaken at the Suburb C home. The evidence as to what was done, by whom and who paid is in dispute. No objective evidence such as photographs was adduced to assist the Court nor was there any evidence to suggest that such work as was alleged to have been done improved the value of the property.
After her husband father’s death in 1999 the husband’s mother asserts various sums paid by her towards repairs, renovations, purchases for the property and school fees totalling about $20,000 over 15 years. However by reason of the parties mixing their funds as referred to above and in the absence of supporting evidence from the second respondent, in particular her bank accounts, it is more probable that such expenses came from the mixing of funds.
The Self-Managed Superannuation Fund
The husband set up the Atuk Superannuation Fund, a self-managed superannuation fund in June 2012. On 25 June 2012 he deposited $41,536 into the fund account with Westpac. The super fund account balance as at August 2014 was $1.91.
The source of funds for the deposit to the super fund is not clear.
In early 2014 the husband caused funds from the super fund to be advanced to F Pty Ltd. At the end of the 2013 financial year the company owed the super fund $44,337. The funds advanced were the subject of a written loan agreement. The debt had increased with further advances by 30 June 2014 to $49,797 and it is to be assumed will have accrued interest to date of trial as the loan agreement provides for interest at 4 per cent per annum.
The husband, notwithstanding the company appears to have traded at a loss, does not assert that the loan from the fund will not be repaid. Surprisingly no funds have been deposited to the company account since its opening in April 2013.
The second respondent’s asserted equitable interest in the home
At the time of purchase of the home the husband represented to the mortgagee that it was he that was purchasing the home for him and his parents to live in. There is no suggestion from the husband that he had any intention that his parents have an interest in his home.
Express trust?
The law as to equitable trusts is well settled. The issue of trusts, (express and constructive) and equitable charges was the subject of consideration by the Full Court in Cierpiatka & Cierpiatka & Cierpiatka (1999) FLC 92-864. The Full Court in Cierpiatka (supra) identified the requirements for the creation of an express trust:
a)Whether there is language or conduct showing a clear intention to forthwith create a trust;
b)Certainty as to the subject matter;
c)The purpose of the trust and the extent of the benefit must be clear.
As to any asserted interest in land, s 23C of the Conveyancing Act 1919 (NSW) provides:
(1) Subject to the provisions of this Act with respect to the creation of interests in land by parol:
(a) no interest in land can be created or disposed of except by writing signed by the person creating or conveying the same, or by the person’s agent thereunto lawfully authorised in writing, or by will, or by operation of law,
(b) a declaration of trust respecting any land or any interest therein must be manifested and proved by some writing signed by some person who is able to declare such trust or by the person’s will,
……………
(2) This section does not affect the creation or operation of resulting, implied, or constructive trusts.
In this matter the second respondent does not contend that there is any writing containing the terms of any trust made either at the time of or subsequent to the purchase of the home such as to create an express trust in her favour as to part of the home property.
Resulting trust?
The second respondent asserts a resulting trust proportionate to her contribution to the overall purchase price.
The initial presumption arising from sole registered ownership is that the registered owner has full ownership and there is no beneficial interest in favour of someone else: (Black Uhlans Inc v New South Wales Crime Commission & Ors [2002] NSWSC 1060 at [128]).
The relevant time for a finding of a resulting trust is the time of acquisition of the property (Calverley v Green [1984] 155 CLR 242). In Shepherd v Doolan [2005] NSWSC 42), White J noted (at [23]):
… that ordinarily the presumption of a resulting trust arises at the time the property is acquired and that, if not displaced, then unless there is a later agreement to alter the equitable interest in the property acquired, or the beneficial interests arising under the resulting trust is displaced by an interest arising under the constructive trust, the interest is not changed by later contributions to the conservation or improvement of the property: If the evidence establishes that it was the intention of the parties that their respective interests should be in accordance with something other than their contributions to the purchase price, such as their contributions to the purchase of the land and discharge of a mortgage, effect will be given to that intention so that although the trust will arise at the time of purchase, the quantum of their interests will fluctuate in accordance with that intention. (Bloch v Bloch[1981] HCA 56; (1981) 55 ALJR 701 at 704; Calverley v Green at 262-263).
His Honour further noted that the concept of what constitutes the purchase price for the purposes of calculating beneficial interests under a resulting trust includes the incidental costs of the purchase, such as legal expenses, stamp duty and registration fees, citing Ryan v Dries[2002] NSWCA 3 at [52]- [53].
A resulting trust arises by presumption of law in two categories of circumstances:
Firstly, a resulting trust may be presumed upon a disposition of the legal estate without any disposition of the beneficial interest, arising by reason of mistake or an oversight.
Secondly, a resulting trust may be presumed where on a purchase the legal title is vested in someone other than the person who is proved to have provided the purchase money.
In Buffrey v Buffrey [2006] NSWSC 1349 Palmer J summarised the principles on which the court proceeds in relation to matters involving presumptions of resulting trust. There, His Honour noted (at [14]) that for the purposes of such presumption:
a) the acquisition cost of property includes the costs, fees and disbursements incidental to its acquisition;
b) a party contributes to acquisition cost by borrowing funds necessary to make up the acquisition cost, whether or not that party subsequently contributes to payment of principal and interest due on the borrowing;
c) parties borrowing jointly in order to make up the acquisition cost are treated as having contributed the borrowed capital in equal shares;
d) a party who does not borrow funds to make up the acquisition cost but who subsequently pays, or contributes to payment of, principal and interest on such a borrowing does not, by that fact alone, make a contribution to acquisition cost.
The Second Respondent, the mother of the husband, contends that the circumstances of purchase of the home give rise to a resulting trust in her favour. However, as contended by Counsel for the wife, such a presumption is subject to the presumption of advancement if not rebutted.
The presumption of advancement
In Vadisanis & Vadisanis and Anor [2014] FamCAFC 97 the Full Court considered the presumption of advancement and said at [38] – [44]:
…The general rule being that where two people have contributed the purchase price in unequal shares, it is presumed that a resulting trust arises in the proportions in which they contributed the purchase money.
This presumption is subject to the exception created by the presumption of advancement (Calverly v Green [1984] HCA 81; (1984) 155 CLR 242).
In relation to the presumption of advancement, in Calverly v Green, Gibbs CJ said at page 246:
Where a person purchases property in the name of another, or in the name of himself and another jointly, the question whether the other person, who provided none of the purchase money, acquires a beneficial interest in the property depends on the intention of the purchaser. However, in such a case, unless there is such a relationship between the purchaser and the other person as gives rise to a presumption of advancement, i.e., a presumption that the purchaser intended to give the other a beneficial interest, it is presumed that the purchaser did not intend the other person to take beneficially.
His Honour further said at page 250:
The presumption should be held to be raised when the relationship between the parties is such that it is more probable than not that a beneficial interest was intended to be conferred, whether or not the purchaser owed the other a legal or moral duty of support.
And at page 251:
However, both the presumption of advancement, and the presumption of a resulting trust, may be rebutted by evidence of the actual intention of the purchaser at the time of the purchase: see Charles Marshall Pty. Ltd. v. Grimsley [1956] HCA 28; (1956) 95 CLR 353 at 364-5 ... Where there are two purchasers, who have contributed unequal proportions, but have taken the purchase in their joint names, the intentions of both are material. Even if the parties had no common intention, the intentions of each may be proved, for the purpose of proving or negating that one intended to make a gift to the other…
It is well settled that the relationship between parent and child gives rise to the presumption of advancement. It follows that unless the presumption is rebutted, it is presumed that the intervener intended that the husband would have what would otherwise have been her additional 21 per cent beneficial interest in Suburb U. The presumption of advancement will be rebutted where there is evidence that the transferor (intervener) did not intend to gift the property or part of it. For example, if the intervener advanced the $50,000 or part of it as a loan, the loaned portion would evince an intention not to acquire a beneficial interest in the property. The money advanced must be provided in character such that the intention to acquire a beneficial interest is evident (Calverly v Green at page 246).
As a consequence, in order to rebut the presumption of advancement, the intervener bore the onus of establishing her intention to acquire a beneficial interest in Suburb U to the full extent of the advance.
The correct time to determine the beneficial interests in a property is at the time of acquisition. This is to be ascertained by evidence of the acts and declarations before or at the time of purchase or so immediately after it as to constitute a part of the transaction (Calverly v Green at 262). However, as was explained in Trustees of Property of Cummins (a bankrupt) v Cummins (2006) 227 CLR 278 at [65]:
... whilst evidence of subsequent statements of intention, not being admissions against interest, are inadmissible, evidence of facts as to subsequent dealings and of surrounding circumstances of the transaction may be received.
In Shephard v Cartwright [1954] UKHL 2; (1955) AC 431 Viscount Simonds said at 445:
... [T]he law is clear that on the one hand where a man purchases shares and they are registered in the name of a stranger there is a resulting trust in favour of the purchaser; on the other hand, if they are registered in the name of a child or one to whom the purchaser then stood in loco parentis, there is no such resulting trust but a presumption of advancement.
Equally it is clear that the presumption may be rebutted but should not, as Lord Eldon said, give way to slight circumstances: Finch v. Finch. (footnote omitted)
It must then be asked by what evidence can the presumption be rebutted, and it would, I think, be very unfortunate if any doubt were cast (as I think it has been by certain passages in the judgments under review) upon the well-settled law on this subject. It is, I think, correctly stated in substantially the same terms in every textbook that I have consulted and supported by authority extending over a long period of time. I will take, as an example, a passage from Snell’s Equity, 24th ed., p. 153, which is as follows:
“The acts and declarations of the parties before or at the time of the purchase, or so immediately after it as to constitute a part of the transaction, are admissible in evidence either for or against the party who did the act or made the declaration... But subsequent acts and declarations are admissible as evidence only against the party who did or made them, and not in his favour.”
In Buffrey v Buffrey [2006] NSWSC 1349 Palmer J at [14] relevantly summarised the applicable principles as follows:
14. The presumptions of resulting trust and advancement often compete in cases between husband and wife, or de facto spouses, or between parent and child, where title to property is held in joint names but the parties have made unequal contributions to the cost of acquisition. The principles upon which the Court proceeds are now well settled and can be summarised thus:
(1) one begins with the presumption that the equitable title to the property is at home with the legal title but that presumption, like all evidentiary presumptions, gives way to facts showing the contrary;
(2) …
(3) the presumption of resulting trust may be rebutted by showing that there is a relationship between the parties giving rise to the presumption of advancement so that the party who has contributed less or nothing to the acquisition cost is nevertheless to have an interest in accordance with the legal title:
(4) if a presumption of resulting trust or a presumption of advancement arises where one party has contributed the whole of the acquisition cost of the property but the title to the property is placed in the name of another party:
a) whether either presumption is rebutted depends upon the intention solely of the party who provided the money because the question is whether that person intended to make a gift of an interest in the property to the person who did not contribute to its acquisition;
b) evidence by the person making the payment as to his or her intentions at the time of the transaction is admissible but the Court will treat that evidence with caution as the evidence of an interested party;
c) the Court is more assisted in determining the subjective intention of the person making the payment by evidence of that person’s contemporaneous statements of intention, subsequent admissions against interest, subsequent dealings with the property, and by evidence of other relevant surrounding circumstances;(5) …
(6) …
(7) for the purposes of the presumptions of both of resulting trust and of advancement:
a) the acquisition cost of property includes the costs, fees and disbursements incidental to its acquisition;b) a party contributes to acquisition cost by borrowing funds necessary to make up the acquisition cost, whether or not that party subsequently contributes to payment of principal and interest due on the borrowing;
c) parties borrowing jointly in order to make up the acquisition cost are treated as having contributed the borrowed capital in equal shares;
d) a party who does not borrow funds to make up the acquisition cost but who subsequently pays, or contributes to payment of, principal and interest on such a borrowing does not, by that fact alone, make a contribution to acquisition cost.For authority in support of these propositions see: as to (1): Currie v Hamilton[1984] 1 NSWLR 687, at 690; Martin v Martin[1959] HCA 62; (1959) 110 CLR 297, at 303; as to (2): Calverley v Green[1984] HCA 81; (1984) 155 CLR 242, at 246, 258-259; Shephard v Cartwright[1954] UKHL 2; [1955] AC 431, at 455; Charles Marshall Pty Ltd v Grimsley[1956] HCA 28; (1956) 95 CLR 353, at 365; Brown v Brown(1993) 31 NSWLR 582, at 596; as to (3): Martin v Martin (supra); Trustees of the Property of Cummins (a bankrupt) v Cummins(2006) 80 ALJR 589 [55]; as to (4)(a) and 5(a): Nelson v Nelson[1995] HCA 25; (1995) 184 CLR 538, at 547; Charles Marshall Pty Ltd v Grimsley (supra) at 364-365; as to (4)(b) and (5)(b): Martin v Martin (supra) at 304; Calverley v Green (supra) at 261; R.S. & G.S. Thompson Haulage Pty Ltd v Leigh[2006] NSWSC 540, [15] per White J; as to (4)(c) and (6): Cummins (supra) 65; Neilson v Letch (No 2)[2006] NSWCA 254 [28] per Mason P; Gissing v Gissing [1970] UKHL 3; [1971] AC 886, at 906; Calverley v Green (supra) at 261; as to (7)(a): Ryan v Dries[2002] NSWCA 3, at [52]-[53]; as to (7)(b), (c) and (d): Calverley v Green (supra) at 251, 267-268.
There is no evidence from the second respondent as to any intention on her part at the time of purchase to acquire any equitable interest in the home. Her evidence is that she advanced funds towards the purchase with the intention that she and her late husband would be able to reside in the property so as to facilitate the rental of their home unit with rental income provided to the husband to assist with mortgage payments. It was her contention until trial that the funds were advanced by way of loan.
The initial presumption is that the legal and equitable title passed on purchase to the husband. There is no evidence from him as at that time that asserts otherwise. Indeed, he represented to the mortgagee of the property that he was purchasing the home for him and his parents “to reside in”.
As a consequence of the relationship of mother and son the presumption of advancement arises and as there is no evidence to displace such presumption any presumed resulting trust is displaced in favour of the husband holding the legal and equitable title to the property.
Constructive trust
Otherwise the second respondent contended that in the absence of a resulting trust that the property (or the proceeds of sale) should be held on constructive trust in part for the second respondent.
In Baumgartner v Baumgartner (1987) 164 CLR 137 the majority (Mason CJ, Wilson and Deane JJ) referred to the result reached by Deane J in Muschinski v Dodds (1985) 160 CLR 583 as an application of the general equitable principle which restores to a party contributions which he or she has made to a joint venture which fails when the contributions have been made in circumstances in which it was not intended that the other party should enjoy them (at 148).
Their Honours referred to what Deane J had said in Muschinski v Dodds (supra) (at 620):
... the principle operates in a case where the substratum of a joint relationship or endeavour is removed without attributable blame and where the benefit of money or other property contributed by one party on the basis and for the purposes of the relationship or endeavour would otherwise be enjoyed by the other party in circumstances in which it was not specifically intended or specially provided that other party should so enjoy it. The content of the principle is that, in such a case, equity will not permit that other party to assert or retain the benefit of the relevant property to the extent that it would be unconscionable for him so to do… (emphasis added)
In West v Mead[2003] NSWSC 161 Campbell J considered what was to be established before such a trust could be imposed:
First, it is necessary that there be both a joint relationship and endeavour, in which expenditure is shared for the common benefit in the course of and for the purposes of which an asset is acquired. The scope of the joint venture in which the parties were engaging may be of relevance and as Deane J in Muschinski considered, may change from time to time.
Secondly, the substratum of that joint relationship or endeavour must have been removed or the joint endeavour prematurely terminated “without attributable blame”.
Thirdly, there must be the requisite element of unconscionability - it would be unconscionable for the benefit of those monetary and non-monetary contributions to be retained by the other party to the joint endeavour.
Joint endeavour?
The first question to be addressed is whether there was a joint endeavour between the second respondent and the husband, her son, pursuant to which the second respondent made monetary or non-monetary contributions in connection with the acquisition of the home.
The evidence of the husband is that the purchase of the property by him was to provide accommodation for him and his parents into the future. It was agreed that the husband’s parents would reside in the property and the husband’s parents agreed to pay a portion of the initial purchase price and further agreed to provide to the husband the rental income from their unit that they were now able to let out by reason of their occupation of the home. This was the joint venture.
Failure of the joint endeavour?
Did the joint venture fail? It did, by reason of the breakdown of the marriage of the husband and wife in respect to which there can be no attributable blame and by reason of which the property was sold and the second respondent’s occupation of the home ended.
Unconscionable retention of benefit?
The third issue is whether there is the necessary degree of unconscionability to warrant the imposition of a constructive trust.
In Baumgartner (supra) the majority noted (at 148) that Deane J in Muschinski v Dodds (supra) had:
…pointed out that the constructive trust serves as a remedy which equity imposes regardless of actual or presumed agreement or intention ‘to preclude the retention or assertion of beneficial ownership of property to the extent that such retention or assertion would be contrary to equitable principle’” but had rejected the notion that it should be imposed in accordance with the idiosyncratic notions of what was just and fair.
In Muschinski v Dodds (supra) whilst acknowledging that general notions of fairness and justice are relevant to a determination of what constitutes unconscionable conduct under the principles of modern equity, Deane J at 616 said:
The mere fact that it would be unjust or unfair in a situation of discord for the owner of a legal estate to assert his ownership against another provides, of itself, no mandate for a judicial declaration that the ownership in whole or in part lies, in equity, in that other.
Deane J also said (at 614-615):
... the constructive trust can be properly described as a remedial institution which equity imposes regardless of actual or presumed agreement or intention (and subsequently protects) to preclude the retention or assertion of beneficial ownership of property to the extent that such retention or assertion would be contrary to equitable principle.
…The fact that the constructive trust remains predominantly remedial does not, however, mean that it represents a medium for the indulgence of idiosyncratic notions of fairness and justice.
In West v Mead (supra) Campbell J said (at [62]) that:
The Baumgartner type of constructive trust is imposed to prevent an unconscionable assertion of legal title, in circumstances where the parties had no explicit intention about how the legal title would be held in the circumstances which have arisen. ... Part of the justification for imposing a Baumgartner constructive trust is that the parties have jointly been building up assets, on the basis that those assets will be available to the joint endeavour in future. Part of the reason why it can be unconscionable to let the legal title lie where it falls, if the relationship fails, is that each knew that the other was contributing to a common pool on the basis that the common pool and assets acquired from it, would be used for the ongoing common benefit. It is unconscionable for the party who ends up, at the end of the relationship, with a disproportionate share of the assets which were built up during the relationship, to keep those assets when he or she knew that that was the basis on which the assets were being built up.
In Cetojevic & Anor v Cetojevic[2007] NSWCA 33, Hodgson JA, with whom Tobias and McColl JJA agreed, said (at [34]):
I accept that it is insufficient for the establishment of a constructive trust that it be considered inconvenient or unfair that legal rights be relied on. I accept that in the circumstances of this case, it was necessary for the respondent to show both that circumstances had arisen which were so outside the contemplation or intentions of the parties at the time of entry into the joint endeavour that it can fairly be said that the joint endeavour had broken down, and also that in those circumstances it was unconscionable for the appellants to rely on their legal rights.
In Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 Brennan J said at 423:
The unconscionable conduct which it is the object of equity to prevent is the failure of a party, who has induced the adoption of the assumption or expectation and who knew or intended that it would be relied on, to fulfil the assumption or expectation or otherwise to avoid the detriment which that failure would occasion. The object of the equity is not to compel the party bound to fulfil the assumption or expectation; it is to avoid the detriment which, if the assumption or expectation goes unfilled, will be suffered by the party who has been induced to act or to abstain from acting thereon.
In Waltons (supra) Mason CJ and Wilson J put the matter as follows at 404:
One may therefore discern in the cases a common thread which links them together, namely, the principle that equity will come to the relief of a plaintiff who has acted to his detriment on the basis of a basic assumption in relation to which the other party to the transaction has 'played such a party in the adoption of the assumption that it would be unfair or unjust if he were left free to ignore it'... Equity comes to the relief of such a plaintiff on the footing that it would be unconscionable conduct on the part of the other party to ignore the assumption.
At the time of purchase of the home it was the reasonable expectation of the second respondent and her late husband that they would be able to reside in the home by reason of their contribution to the purchase price and to a lesser extent by reason of their agreement to direct their rental income to the husband’s finances.
It was this expectation that ended by reason of circumstances beyond their control and without attributable blame.
The question is whether in the circumstances the retention by the husband of his parents’ contribution to the home purchase would be unconscionable where the expectation of being able to live in the property for some indeterminate period of time has been frustrated.
Yet the parents, in particular the husband’s mother, have had the benefit of occupation for about 15 years with the wife being to a degree her carer until separation particularly in the latter years of that period. They were able to rent out their property and the second respondent retained that property during the same period and now resides back in her own home.
By agreement the payment of rent to the husband and wife’s account is to be considered in the context of their contributions.
Having considered the above the retention of the second respondent’s capital sum by the husband would not be unfair or unjust. There will be no constructive trust imputed in favour of the second respondent.
Property adjustment
The approach to the determination of an application under s 79 of the Act is set out in Stanford v Stanford [2012] HCA 52 and further considered by the Full Court in Bevan& Bevan [2014] FamCAFC 19, Chapman & Chapman [2014] FamCAFC 91 and Scott & Danton [2014] FamCAFC 203.
The process ordinarily involves a staged process.
The Court must identify the existing legal and equitable interests of the parties in the property, the liabilities and financial resources of the parties at the time of the hearing and then whether it is just and equitable to make a property settlement order.
Such a consideration should not be guided by an assumption that the parties’ rights to or interests in property are or should be different from those that then exist. The question is whether those rights and interests should be altered.
There is no presumption that one or other party has the right to have the property of the parties divided between them or a right to an interest in marital property that is fixed by reference to the various matters in s 79(4). The Court needs to conclude that it would be unjust or unfair to leave property rights intact.
In many cases this requirement is readily satisfied where the parties are no longer in a marital or de facto relationship and, thus, for example, the common ownership or use of property by husband and wife will no longer be possible or the express or implicit assumptions that underpinned existing property arrangements such as the accumulation of assets or financial resources by one for the benefit of both have been brought to an end with the relationship.
In particular, such a circumstance arises where both parties seek property adjusting orders but are unable to agree as to same. Here both parties seek different orders as to the division of their property and it is conceded by counsel for both parties that it is appropriate for the Court to make orders altering their present property interests. It is appropriate to do so.
Once the s 79(2) issue is resolved the Court then considers the contributions made by the parties as defined in s 79(4)(a) to (c).
The Court must then consider s 79(4)(d) to (g) in particular the subjective considerations as to the parties by having regard to the provisions of s 75(2) in so far as they are relevant (s 79(4)(e)).
The Court can then consider the “justice and equity” of the actual orders to be made: Russell & Russell (1999) FLC 92-877; Teal & Teal [2010] FamCAFC 120, in the context of the Court’s obligation to make “appropriate orders” as provided for in s 79(1) of the Act.
“The pool”
The present asset pool as refined in evidence and submissions comprises the following:
Joint Controlled funds sale proceeds $443,859
Husband Household Contents $ 5,000
Wife Household Contents $ 6,000
Wife Car $ 7,000
Wife Jewellery – ring $ 1,000
Wife Cash $ 14,461
Wife Superannuation $ 2,000
Husband Superannuation $ 49,797
Husband F Pty Ltd $ NK
Liabilities
Husband CBA Personal loan $ 26,987
Husband Westpac Credit Card $ 64,500
Husband Citibank Credit Card $ 24,000
Husband ANZ Credit Card $ 17,200
Husband Centrelink debt $ 10,500
Some items above are in contention:
a)Wife – Car: There is no evidence of value. The value adopted is as asserted by the wife as an admission against interest.
b)Wife – Jewellery – ring: There is no evidence of value. The value adopted is as asserted by the wife as an admission against interest. It is noted the husband was afforded the opportunity to acquire the ring at less than half the value contended by him ($11,300) (Exh E). He failed to elect to do so.
c)Wife – Cash: The husband contends these were funds taken by the wife at separation. It allegedly comprised $961 withdrawn from the parties’ joint account by the wife post separation and two sums of cash the wife took from the home totalling $5,500. The $961 represented part of the wife’s salary paid into the joint account after separation. The balance as to cash there is simply no evidence to support the husband’s contention that is denied by the wife. There is no evidence at all as to the balance of the $14,461. This will be excluded from the “pool”.
d)Husband – F Pty Ltd: This is the business conducted by the husband. He has advanced funds from his super fund to the company. It is to be inferred that such advance stands in the balance sheet of the company as a debt owing to the husband. Otherwise the husband has adduced no evidence as to the financial circumstances of the company as to assets and liabilities. There is no evidence from the husband that the debt will not be repaid by the company. The husband produced little information about this company until his oral evidence notwithstanding requests over a period to do so from the wife. The husband contended that the value of the company was in fact negative equal to the debt owed to the super fund. It cannot be presumed that such is the case. It is the husband’s company; it is his obligation should he contend a particular value to adduce either single expert evidence as to such or adversarial evidence. He did not do so.
e)Husband – Superannuation: This represents the funds owed by the company to the fund.
f)Husband – Credit cards and personal loans: These are discussed above. The husband seeks to have these debts included as liabilities in the “pool” with the effect that the wife would bear some responsibility for same. He has adduced no evidence to support such an approach. For the purposes of adjustment they will be excluded.
g)Husband – Centrelink debt: Again the husband seeks to have this alleged debt included as a liability in the “pool” with the effect that the wife would bear some responsibility for same. He conceded that he applied for family assistance benefits after separation. Those benefits were paid into his Westpac account that he opened after separation when he deposited $13,056 to the account. He says that upon the parties’ 2014 tax returns being filed some time later he was assessed at an overpayment of $10,000. He has adduced no evidence to support such an approach. He received the funds. For the purposes of adjustment it will be excluded.
The “pool” for adjustment purposes is thus as follows:
Joint Controlled funds sale proceeds $443,859
Husband Household Contents $ 5,000
Wife Household Contents $ 6,000
Wife Car $ 7,000
Wife Jewellery – ring $ 1,000
Wife Superannuation $ 2,000
Husband Superannuation $ 49,797
Husband F Pty Ltd $ NK
$514,656
Liabilities Nil
$514,656
Contributions:
At cohabitation the husband brought into the relationship the home. It had some equity by reason of his parents’ contribution to the purchase. He should receive recognition for this.
Various assertions were made as to work done on the property and the factual issues as to same can mostly not be resolved. Yet no evidence was adduced that asserted any increase in value of the property due to work done.
The husband worked during the relationship, including for some time in full time employment with Company G. The wife worked for some periods during the relationship but was the primary carer for the children. In the latter part of the relationship she returned to work in the child care industry and remains so employed. The second respondent assisted in the home and at times with the children but they are not contributions by “a party to the marriage” as contemplated by s 79(4)(c).
Counsel for the wife argued that contributions should be regarded as equal to separation with post separation contributions favouring the wife by reason of her greater parenting role and no financial support from the husband leaving her the primary provider for the younger children. Overall he contended for 60/40 in favour of the wife.
Yet there must be recognition of the husband’s initial contribution and the receipt of funds through the second respondent.
Counsel for the husband, in what was surely a fit of enthusiasm, contended that contributions should favour the husband 80/20 to separation with there being no adjustment for post separation contributions.
Assessing contributions is in essence a holistic exercise. As the Full Court in Dickons & Dickons [2012] FamCAFC 154 said:
23. …There is in our view little to be gained, and much to be said against, approaching the task of assessing contributions by attaching percentages to components of it. (The same, it might be said, applies to attributing a percentage to each of the relevant s 75(2) factors).
24. There can be little doubt that the classification of contributions by reference to terms such as “initial contributions”, “contributions during the relationship”, and “post-separation contributions”, can be helpful as a convenient means of giving coherent expression to the evidence in a s 79 case and to giving coherence to the nature, form and extent of the parties’ respective contributions. However, the task of assessing contributions is holistic and but part of a yet further holistic determination of what orders, if any, represent justice and equity in the particular circumstances of this particular relationship. So much is clear from the terms of s 79 itself and, in particular, s 79(2). The essential task is to assess the nature, form and extent of the contributions of all types made by each of the parties within the context of an analysis of their particular relationship.
25. Doing so is also consistent with the demands of authority that the ultimate assessment of contributions should be made without “…giving over-zealous attention to the ascertainment of the parties’ contributions…” (Norbis v Norbis (1986) 161 CLR 513 at 524) and the well-established recognition in the authorities (acknowledged specifically by her Honour in this case) that the process required of the Court by s 79 is the exercise of a wide discretion, not the performance of a mathematical or accounting exercise.
26. The necessarily imprecise “wide discretion” inherent in what is required by the section is made no more precise or coherent by attributing percentage figures to arbitrary time frames or categorisations of contributions within the relationship. Indeed, we consider that doing so is contrary to the holistic analysis required by the section and, in the usual course of events, should be avoided.
Having regard to the matters discussed above contributions over the 16 years of this relationship will be assessed as favouring the husband 57.5 per cent/42.5 per cent. This will create a disparity of about $75,000 between the husband and wife.
Section 75(2) factors
Regard has been had to the considerations set out in the section.
The husband is 43 and the wife 35. There are no health issues
The wife is in employment as a child carer. The husband has capacity to work earning about $70,000 per annum that he does not exercise either because he has elected to care for his mother or is developing his business. Such is his choice. No adjustment is called for as a consequence of this consideration.
The eldest child living with the father has commenced an apprenticeship. The two children who live primarily with the wife are aged 4 and 12. This is a significant consideration.
The wife has modest superannuation and the husband about $50,000. The accrual of further superannuation for both in the immediate future is problematic as the wife is a self-employed contractor and the husband has by choice stopped salaried employment.
There is little prospect of the wife receiving child support from the husband unless he returns to salaried employment. He has not professed any intention of so doing. This is a significant consideration.
It was contended by counsel for the wife that under s 75(2)(o) regard should be had to the refinance by way of additional borrowings by the husband in 2008. Regrettably there is little or no evidence adduced that would lead to such a course. However the disposition of available funds from the 2008 refinance is dealt with above and the resultant credit card debts of the husband have been excluded from consideration in the context of the “pool”.
Yet the husband will be left with significant debt that he has accrued and failed to account for in the matrimonial context. This debt will be taken into account but the strong inference is that it is mostly of his own creation.
Counsel for the wife contended that there should be a further adjustment in favour of the wife in the range of 25-30 per cent. Counsel for the husband contended that there should be no adjustment to the contribution findings as the wife’s care of the children is balanced by the husband’s retention of debt.
Overall an adjustment in favour of the wife of 10 per cent is called for by reason of s 75(2) considerations. This creates a disparity of about $100,000 between the parties.
Overall
By reason of the above findings overall the “pool” should be adjusted in favour of the wife as to 52.5 per cent and the husband 47.5 per cent.
The wife is entitled to $270,194.
She has:
Household Contents $ 6,000
Car $ 7,000
Jewellery – ring $ 1,000
Superannuation $ 2,000
$16,000
She should receive from the controlled monies account a further $254,194 plus any interest accrued on that sum in the account to date of payment.
The husband will receive the balance of the account plus interest accrued on that sum and the other assets and entitlements in his possession.
Such a result is just and equitable in all the circumstances.
The orders proposed do not affect the earning capacity of either party.
Orders will be made accordingly
I certify that the preceding one hundred and forty-three (143) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Foster delivered on 24 March 2016.
Associate:
Date: 24 March 2016
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